Private Money Lender, Scam?

[Derek Tuohy]

I have 2 projects that I need financing for.  I bought two rental properties with cash.  One I need delayed financing on, and the other im looking to finance purchase amount plus rehab, then into a mortgage.  I reached out on Facebook to a private money lender.  This was part of his loan application:

"The only fee charged is for the Loan Protection Insurance (LPI ) which
is charged at 2% of the loan amount and has to be paid before closing
after signing our approval contract then we proceed to disbursing the
fund into your provided account as soon as the loan is duly insured."

Sounds fishy.?!

D

[Jay Hinrichs]

Quote from @Scott Trench:

Talk to the lenders here on BiggerPockets under "Find a Lender" - these folks will not attempt to charge you any upfront fees, though there will of course be some costs wrapped into the loan. 

An upfront payment to a lender is a loud red flag, and I agree with everyone here that you should run away, fast. 

there simply is no such thing in the lending world as a LPI it does not exist it only exist for fake lenders that are scamming the S@#$ out of those who are not familiar with how lending works be it banks for pML or HML what these guys do is make it sound close enough to PMI which does exist for government loans.. So folks not knowing what they do not know just figure well its not PMI its LPI so sounds OK..

Full stop fake lender out to steal your money.. don't go shopping for money in Facebook .. BP has done a nice job of collecting some real lenders and every state has real lenders you can google them.